Portfolio Manager comment Coeli Nordic Corporate Bond Fund R-SEK December 2019

Nordic Corporate Bond Fund (Class R) advanced during December with 0.33 percent. Since year-end, the NAV per share has consequently increased by 3.14 percent. The year ended on a strong note in the corporate bond market as the strong risk appetite from November remained, bringing credit spreads somewhat tighter. Initially, activity in the primary market was high, but declined towards the end of the month.

Intrum was among the major contributors, which carried out a refinancing of parts of the company’s bank loans during the month. The new loan facility is larger and with a longer maturity than the previous one, which strengthens the company’s liquidity profile. Bonds from the consumer credit company 4Finance also developed well thanks to growing interest and demand from investors, which provided support for bond prices.

Bonds from Heimstaden Bostad were positively affected by news that Folksam and KPA Pension were entering as the new owners in the company through a private placement. In total, Heimstaden Bostad receives more than SEK 7 billion in the share issue and this can be seen as a step forwards towards the company’s ambition to achieve a higher credit rating.

With a few exceptions, most holdings developed positively during the month. Bonds from the Norwegian ferry operator Fjord1 fell somewhat after the principal owner acquired more shares in the company and announced its intention to merge the company with another company, which is fully owned by said principal. A merger could cause a deterioration of Fjord1’s financial position; also, the proposed transaction causes some concern about how the governance is exercised and whether the interests of minority shareholders and bond investors are best looked after. As a group, covered bonds made a minor negative contribution due to rising market interest rates.

During the month, a new investment was made in a covered bond from Svensk Hypotekspension, Sweden’s leading player in capital release credits. Mariefjärd, a wholly owned subsidiary of Klövern, left the portfolio when the bonds were early redeemed. Bonds from the ICA Group were also divested as they were considered to be fully valued. Fixed-rate bonds in euros from the Samhällsbyggnadsbolaget i Norden with maturity in 2025 were exchanged for bonds with floating interest rates in Swedish kronor with maturities in the same year.